Setting up business across borders: expatriate in Asia

Singapore angel investor John Tan says being an expat in Asia and having no network can sometimes be an advantage.
AFR

by
Ben Hurley

Singapore-based angel investor
John Tan
says it’s not as scary as some might think to set up a business as an expat in Asia.

Australia’s proximity to Asia is often viewed as a major point of difference with more developed entrepreneurial landscapes like the United States. But when it comes to actually setting up a business in Asia, Australians are still daunted by stark differences in culture, law and ways of doing things.

But speaking at the Echelon Ignite Australia 2013 forum – an event aimed at helping Australian technology start-ups make their way in south-east Asia – Tan said expatriates from Western countries had some distinct advantages over locals in pitching to Asian investors. He has invested in at least nine Asia-based start-ups, with founders from countries including Canada and France.

“I don’t necessarily think you need to be from that country to succeed. Actually, it’s the reverse," Tan says. “When local companies start, 80 per cent of their traction is going to be from friends and family, so it’s hard for investors to tell whether it’s real traction or just buddies of yours."

Faith in the locals

Expat company founders, on the other hand, were sometimes viewed favourably because they did not have such cosy networks to draw from. They had displayed a lot of faith in their business, and the country’s economy, by setting up shop.

One of Tan’s investments is Philippines-based
Payroll Hero
, a tech start-up which replaces the punch card system used at workplaces where employees punch a hole in a card when they arrive. The system is vulnerable to fraud, with friends able to punch the card when an employee doesn’t show up. Payroll Hero gets around this using facial recognition and GPS.

Its Canadian founders,
Steve Jagger
and
Mike Stephenson
, base some of their operations from Whistler, Canada, so they can attract talented engineers with the lure of skiing the slopes in their spare time. They secured Tan’s funding, but were also well placed to get funding from abroad, Tan says. “Obviously, because they are Canadians, they know people at home; it’s easier for them to raise money from people in Canada and the United States."

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Another of his investments,
8villages
, is an Indonesian business with French founders that links farmers with business and government.

But Tan says it is essential for a business to have a local team. Among his investments, only one had successfully opened to a different south-east Asian market to where it was founded, owing to vast differences across borders within the region.

“They face huge differences and they find that unless you speak the language and have a person on the ground, it’s an uphill battle."